For some council tenants, EPF home loan not sweet deal

By Melissa Chi

February 12, 2012

View of KLCC from the 17th floor of the Seri Sabah flats in Cheras. — Picture by Choo Choy May

KUALA LUMPUR, Feb 12 — On a clear day, the iconic Petronas Twin Towers can be sighted from the top floor of the 17-storey high Seri Sabah flats in pollution-choked Cheras. 

The view that the rich pay millions for is a luxury the poorer residents of the city can also afford, at RM124 a month or between RM25,000 and RM35,000 for life. 

Seri Sabah is just one of dozens of low-cost high-rise housing schemes owned by the Kuala Lumpur City Hall (DBKL) and currently the centre of a storm over a government loan proposal. 

Under the scheme, its tenants will be able to buy up their units with loans from a workers’ pension fund, for which they would ordinarily not qualify for at commercial banks because they fall into the high risk class of borrowers. 

And most of the tenants at Seri Sabah do fall into that group — many of the households draw a monthly income of RM3,000 or less. Many of the heads of households are retired. 

And surprisingly, many of the tenants whom The Malaysian Insider spoke to during a recent visit said they would not take up the proposed loan offer even though they liked their home. They said they preferred to buy up the place with their own money or continue to rent from DBKL. 

Mr Lee chatting with a neighbour about how long they've lived here. - Picture by Choo Choy May

An elderly Chinese man who was shooting the breeze with his wife and a neighbour at the tiny park within the flats grounds told The Malaysian Insider he had been living there 25 years and never thought of buying. 

Speaking in the Hakka dialect, Mr Lee, as he wanted to be known, said he didn’t see a point in buying. 

“If one of us goes, the other will live with one of our kids,” he said nonchalantly. 

Rent is RM124 a month and the water and electric bill comes up to about RM80 monthly, he said. It costs about RM27,000 to buy their unit, he added. 

Zaiyani Ali, a 22-year-old clerk for Yayasan Belia who earns RM900 a month told The Malaysian Insider that her father had already purchased the unit with money withdrawn from his Employees Provident Fund (EPF) savings to buy their RM28,000 home there. 

She said she lives in the flat with her parents and brother and that their combined household income is RM2,000. 

She said her unit now costs RM35,000. 

Some of her neighbours, she disclosed, had bought units, renovated it and rent it them out for RM450 a month. 

Thirty-year-old Iza who works as a clerk has lived in Seri Sabah with seven others in a 650 square-foot-flat for more than 20 years. The total household income is RM3,000. 

She said her family never considered buying the unit because she heard that if they want to resell it, it has to go back to the city council or to a relative. 

“I don’t agree with this housing scheme because there are already housing loans available (for low-income earners),” said Iza, who was born in Johor, during a walk around the flats open grounds with her mother and her three-month-old baby. 

Fifty-eight year old Saudiah Husin lives with her husband and two grown-up children, seemed uncomfortable with the thought of using money borrowed from someone else’s retirement savings to fund her home purchase. 

“If you loan to people like us, who’s going to pay in the end?” she said. 

The housewife said she was aware that those who were unqualified for bank loans would likewise have a higher percentage of defaulting on their payments. 

The family, which has an approximate household income of RM1,700, are in the midst of purchasing their unit, with their own savings. 

One daughter, Saudiah said, is manager with Pizza Hut and draws RM1,000 a month. The motherly Saudiah said she can earn up to RM700 babysitting. 

She said the government has always encouraged the tenants to purchase the units they were living in, but the only problem was that they had to wait until get an offer letter from City Hall. 

Like Saudiah, 57-year-old Siti who is similarly living with her husband and two children in Seri Sabah said she too was paying for her flat with their own money. 

“I think it’s not right that the government is using other people’s money, EPF funds,” she said, referring to the Employees Provident Fund. 

Vies of KLCC from the 17th floor. - Picture by Choo Choy May

Federal Territories and Urban Well-being Minister Raja Datuk Nong Chik Raja Zainal Abidin who mooted the proposal had said the loan would be secure as it is guaranteed by the government through its local council. 

He said the EPF would earn 5.5 per cent interest annually from the repayments made by the 20,000 new house buyers. 

The Umno senator also said he expects “not more than 10 per cent (of the borrowers) will default”. 

The government has been forced to address fears that the housing loan scheme would result in losses for the 5.7 million active EPF contributors. 

Under the scheme, applicants will receive a 100 per cent loan, with a repayment period of up to 25 years to allow borrowers to make “smaller” monthly repayments. 

DBKL deputy director-general (socio-economy development) Datuk Amin Nordin Abd Aziz had said that buyers under the scheme would have to pay less than RM300 a month, depending on the duration of the loan which was up to 25 years and the size of the house.  Those currently renting are paying between RM124 and RM194, depending on the size of the unit 

He also said that some 80 per cent of the tenants of DBKL public housing had paid their rent for the last two years, thus making them eligible for the housing loan. 

Amin reportedly said that there are 14,584 units of DBKL public housing and 29,562 units under the Economic Action Council’s People Housing Programme (PPR-MTEN) available and 12,675 eligible tenants have accepted the offer. 

Children playing at the playground. - Picture by Choo Choy May

Under the PPR rental programme, a total of 75 projects containing 70,199 units were scheduled to be completed. 

Of that figure, 24 projects (of 32,762 units) were built in KL and 51 other projects (37,437 unit) were built in other states. 

As at 2007, a total 49 project comprising 52,716 units have been completed. 

Another 26 projects with 17,483 units are in various stages of construction and were expected to be completed by 2010. No further news is posted on its website. 

According to the web site, there are still 86,572 poor families in the country, with the highest in Sabah, 23, 692. KL has 11,181 families. 

There are other city renters who said they would grab the opportunity to own their house with the housing loan scheme. 

Halimah Yatim, 58, who is a single mother and now lives with one of her three children, said she appreciates the chance for low-income earners to get loans. 

“If I have to pay till the day I die, so be it,” she said, jokingly. 

Her household income is RM2,000 and to buy the unit would cost about RM28,500. 

The grandmother of four said she has been living there for the past 17 years. 

Huzaimi Ishak, 32, a dispatch clerk also welcomed the housing loan. 

He lives with seven others including his wife and a toddler, some of his siblings and spouses as well. They have been living there for the past decade. 

He told The Malaysian Insider that now that he has a child, he can apply to rent a unit at the flats. He had done so eight months ago but has yet to get an approval for the next five years. 

However, others are unsure about the scheme until more details are announced. 

Kalesom Hamzah and her family. - Picture by Choo Choy May

Kalesom Hamzah, 55, who lives with six other people in her two-bedroom flat said she is considering this housing loan proposed by the government but it very much depends on the interest rate and the payment plan. 

Her husband, a taxi driver, the sole income provider for the family earns RM1,500 a month. 

“We don’t want to go through the banks because the interest rates are high,” the grandmother to two toddlers said. 

She said previously, if you’ve lived for more than a decade at the flats, that is considered as the down payment to purchase the unit. 

“We don’t want to live elsewhere. It is comfortable here and there is good transportation around here. If I get stressed sometimes, I can come out here to get some air,” she said pointing to the balcony which has two bright pink chairs. 

There are some who are less optimistic as they feel that the offer sounded too good and so believe the interest rate will be very high. 

Mok Chee Keong, who is over 70 years old has lived in the flats for more than two decades with his wife and three sons. 

“Of course everybody wants to buy a house but if you have no money to buy and can’t even get loans, how to buy?” he said.